What to know:
- Ah, the sweet sound of tariffs! Donald Trump’s latest escapade has sent crypto values plummeting faster than a cat off a hot tin roof.
- But wait! Is this a ‘buy-the-dip’ moment? Or just a mirage in the desert of despair?
- With a staggering $2.2 billion liquidated in the crypto futures market, it seems we might be at the end of a price correction. Or is it just the beginning of a new circus act?
In a plot twist worthy of a Dostoevsky novel, Trump’s tariff imposition has sent the market into a tailspin, leaving bitcoin (BTC) and its merry band of crypto companions gasping for breath in the past 24 hours.
Traders, those brave souls, are whispering sweet nothings about this Monday’s bloodbath being a golden opportunity to buy the dip, fueled by the ever-growing demand for dollar-backed stablecoins. Because who doesn’t love a good stablecoin, right?
“One bullish take is for stablecoins,” quipped Peter Chung, the head honcho at Presto Research, in a Telegram message that surely had him sipping a fine vodka.
“Treasury Secretary Scott Bessent has noted that Trump prefers tariffs over sanctions as a diplomatic tool, which is like choosing a sledgehammer over a scalpel. If that’s the case, we might just see the Stablecoin Bill prioritized in Congress, enhancing the dollar’s functionality and reinforcing its global dominance,” Chung mused, probably while staring into his crystal ball.
Vincent Liu, the chief investment officer at Kronos Research, echoed this sentiment, likely while polishing his collection of rare coins.
“With ongoing concerns over tariff escalations and currency volatility—illustrated by the Canadian dollar’s decline against the USD since tariffs were introduced—stablecoins pegged to major fiat could see accelerated adoption,” Liu said, as if he were predicting the weather.
“As a hedge against economic uncertainty, they streamline global transactions, remove forex conversion hurdles, and provide a seamless gateway into crypto. In the long run, increased stablecoin adoption could enhance liquidity, attract institutional capital, and drive regulatory clarity. This evolution may position stablecoins as a cornerstone of the crypto economy, reinforcing market stability and fueling sustained growth,” Liu added, probably while daydreaming of a crypto utopia.
Meanwhile, a $2.2 billion flush from crypto futures since Sunday may provide the bedrock for short-term respite. High liquidations can often signal an overstretched market, making it favorable to buy after a steep fall. Or, you know, it could just be a trap set by the market gods.
Price-chart areas with high liquidation volumes can act as support or resistance levels, where the price might reverse due to the absence of further selling pressure from liquidated positions. Or it could just be a game of musical chairs.
However, if the market continues its downward spiral, those with short positions might see this as validation, potentially increasing their bets. Conversely, contrarian traders might view heavy liquidation as a buying opportunity, expecting a price recovery once the sell-off momentum wanes. It’s like watching a soap opera, really.
What Happened?
Trump imposed a 25% tariff on goods from Canada and Mexico and a 10% tariff on imports from China over the weekend. The move seemingly started a trade war: Canada countered with a 25% tariff on $106 billion worth of U.S. goods, and Mexico is expected to implement similar measures. Oh, the drama!
Two-year Treasury yields increased, while the 10-year yield decreased, indicating concerns about short-term inflation. Asian markets fell on Monday, gold prices dropped, oil rose, and crypto market tanked. It’s like a financial buffet where everything is on the menu, but you’re only allowed to eat the bad stuff.
Trump is also eyeing tariffs on goods imported from the European Union, which could come “pretty soon,” per the BBC. The EU said it would act as a collective and “respond firmly” if and when tariffs come in, indicating retaliatory taxes. Because nothing says “let’s be friends
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2025-02-03 14:00